What the US midterms mean for Malaysia and Asia

THE UNITED States mid-term elections have shifted the balance of power in Washington, DC, but whether they will alter US foreign policy is an open question.

For Malaysia and its neighbours, that distinction carries real consequences. Democrats have won control of both houses of Congress but we need to be mindful of clichéd references about President Donald Trump being therefore "politically hamstrung" for his remaining two-year "lame duck" period.

At first blush, Congressional control by the Democrats may constrain Trump at home but let us not forget he is still the President and one who wields significant veto powers.

It offers little reason to expect a more predictable or accommodating United States, where policy is increasingly shaped by forces that do not always pull in the same direction.

Some reflect Trump’s personal instincts and negotiating style. Others command support across party lines and are likely to outlast his presidency.

The rest of us will need to tell the two apart.

Undoubtedly, the scale of the Republican defeat was striking. Democrats made gains even in traditionally conservative states, a result of anger over living costs, the war with Iran and Trump’s conduct in office.

His devoted supporters could not sustain the broader coalition that returned him to the White House in 2024, and two years later enough voters were ready to punish his party.

The Democratic victory should nonetheless be kept in proportion. Divided government is hardly unusual in American history, and Trump governed with a Democratic House during the final two years of his first term without showing much deference to Congress.

The incoming Congress can investigate the administration, challenge spending decisions and obstruct legislation. Democratic control of the Senate will complicate presidential appointments. Trump, meanwhile, retains substantial executive powers and his veto.

Democrats lack the numbers to override the latter or to secure his removal from office following impeachment.

Nevertheless, Secretary of War Pete Hegseth will most likely be thrown under the bus to appease the bloodthirsty group braying for its pound of flesh, metaphorically speaking.

Washington may become consumed by partisan confrontation, with little to show in substantive policy.

For America’s trading partners, whose interests rarely feature prominently in domestic political battles, that prospect offers scant comfort.

Trade illustrates the difficulty. Democrats have criticised Trump’s tariffs for raising costs for American businesses and consumers, and some restrictions may now face closer scrutiny.

Economic nationalism has also taken root in both major parties. Protecting domestic manufacturing, resisting Chinese competition and using trade to advance strategic goals all enjoy considerable bipartisan support.

For Malaysia, the more consequential question is how far US trade policy has become an instrument of strategic competition.

Tariffs may change, but it would be naïve to expect any pushback in the use of economic leverage against trading partners.

The stakes for advanced technology may be higher. Competition with China over semiconductors and artificial intelligence commands broad support in Washington.

Senator Chris Coons, who is expected to chair the Senate Foreign Relations Committee, has called for an investigation into alleged connections involving Chinese intelligence and leading figures in the US AI industry.

This was on the cards even before the Financial Times exposé of Nvidia CEO Jensen Huang's affair with Alice Huang, allegedly a Chinese intelligence operative.

If she was indeed a spy, that would be the oldest trick in the book. Congressional pressure on Trump over China could therefore intensify.

Malaysia is particularly exposed here. Its semiconductor industry and expanding data centre sector have made it an important participant in global technology supply chains, and have also drawn US scrutiny over the possibility that restricted equipment could reach China through intermediaries.

A more assertive Congress could press for tighter export controls, closer checks on end users and stronger enforcement against suspected diversion.

Access to advanced American technologies may depend increasingly on satisfying US regulatory and security requirements.

Malaysia has legitimate commercial interests with both the United States and China, and protecting them will require credible enforcement, clear regulation and sustained engagement with both countries.

Relations between Washington and Beijing may grow more complicated for much the same reason.

Trump has shown a willingness to negotiate directly with President Xi Jinping, at times pursuing arrangements that diverge from the wider US strategic consensus.

After his domestic setback, he may have stronger incentives to secure deals offering economic relief or a visible diplomatic success.

An understanding between the two presidents would leave many underlying disputes unresolved. Congress could challenge concessions involving sensitive technologies or security commitments, and US regulators would retain considerable influence over implementation.

Like the rest of us, Beijing must now deal with an administration whose priorities may differ from those of other powerful institutions in Washington.

For South-East Asia, these competing pressures complicate an already difficult relationship with Washington.

Vietnam and Thailand remain exposed to US trade restrictions through their manufacturing sectors. Singapore’s weight in finance and advanced technology brings different sensitivities, and Indonesia’s ambitions in critical minerals and industrial development may meet US objections.

The Philippines must contend with questions about the reliability of US security commitments amid tensions over Taiwan and the South China Sea.

These differences make a common Asean response difficult. The region nonetheless shares an interest in strengthening its own economic foundations and reducing vulnerabilities that outside powers can exploit.

Regional integration remains incomplete, and the growing use of economic restrictions for strategic purposes makes it more pressing.

The war with Iran adds another source of uncertainty. It contributed heavily to Trump’s electoral difficulties by driving up energy prices and household costs.

His administration now faces competing pressures to negotiate an end to the conflict or resume major military operations, and Congress may have limited ability to determine the outcome.

For Malaysia, the immediate concern is the effect on energy supplies, shipping and global demand. As an energy producer, Malaysia has some advantages, but higher freight costs and inflation would still burden businesses and households.

A prolonged conflict would also weigh on the wider Asian economy.

The election also produced a milestone. Abdul El-Sayed’s victory in Michigan, making him the first Muslim elected to the US Senate, is pivotal in its own right.

The Islamophobic attacks directed against him during the campaign, though, were a troubling reminder of the prejudices that persist in American political life.

As for the Congressional stance on Israel, any suggestion of a major shift is wishful thinking.

While progressive factions are up in arms against Senate Democratic Leader Chuck Schumer and House Democratic Leader Hakeem Jeffries over their alignment with AIPAC having benefited from the financial largesse heaped on them, chances are they will continue to lead in Congress, on account of the deep institutional backing within the party.

Trump’s defeat does not mean the forces that brought him to power have disappeared. His successors may keep much of his approach to trade, immigration and relations with China, and even a future Democratic president would face strong pressure to protect US industries and maintain technological advantages over strategic rivals.

For Malaysia, the practical implication is clear. We must deal with the United States as it is. Washington remains an indispensable economic and diplomatic partner, but effective engagement means working with Congress, regulatory agencies and the wider political currents shaping US policy.

This also calls for greater investment in our own capabilities. A country that depends heavily on foreign technology, markets and investment cannot insulate itself from decisions made elsewhere.

Sound institutions, regulatory credibility and a more competitive economy can give us greater room to manoeuvre.

The midterms are a setback for Trump and an affirmation of American democratic accountability. For Asia, the consequences are less clear.

The balance of power in Washington has shifted, but the forces behind American economic nationalism and strategic competition with China have not gone away.

Datuk Prof Dr Mohd Faiz Abdullah is executive chairman of the Institute of Strategic and International Studies, Malaysia.